279 U.S.

211
49 S.Ct. 308
73 L.Ed. 665

PAMPANGA SUGAR MILLS

v.
TRINIDAD.
No. 325.
Argued March 1, 1929.
Decided April 8, 1929.

Messrs. Louis Titus, of Washington, D. C., Quintin Paredes and Felipe

Buencamino, Jr., both of Manila, Philippine Islands, and Oscar Sutro, of
San Francisco, Cal., for petitioner.
[Argument of Counsel from page 212 intentionally omitted]
Mr. Wm. Cattron Rigby, of Washington, D. C., for respondent.
Mr. Justice BRANDEIS delivered the opinion of the Court.

Pampanga Sugar Mills, the plaintiff below, was the owner and operator of a
sugar mill in the Philippine Islands. The business of the corporation consisted
of milling sugar cane grown on lands owned and operated by others. The cane
was delivered to the corporation by its owners under milling contracts which
provided that the corporation should receive, as compensation for milling, onehalf of the resulting centrifugal sugar, the other half going to the owners of the
cane. The half received by the corporation was sold from time to time in the
ordinary course of trade. Upon sales so made in 1920, 1921 and 1922 a tax was
assessed as on merchants' sales under section 1459 and section 1460 of Act No.
2711 of the Philippine Legislature, known as the Administrative Code of 1917.
Trinidad, the defendant below, was the then collector of internal revenue of the
Islands. The tax, which was 1 per cent. on the sales value of the sugar so
produced and sold by the corporation, amounted to 60,911.42 pesos.

The corporation claimed that its operations were not within the purview of the
statute, paid the tax under protest, and then brought this suit in the court of first

instance at Manila to recover the amount. The question presented was one
solely of statutory construction. Is the corporation a merchant within the
meaning of the law? The pertinent provisions of the statute are these:
3

'Sec. 1459. Percentage tax on merchants' sales.-All merchants not herein

specifically exempted shall pay a tax of one per centum on the gross value in
money of the commodities, goods, wares, and merchandise sold, bartered,
exchanged, or consigned abroad by them, such tax to be based on the actual
selling price or value of the things in question at the time they are disposed of
or consigned, whether consisting of raw material or of manufactured or partially
manufactured products, and whether of domestic or foreign origin. The tax
upon things consigned abroad shall be refunded upon satisfactory proof of the
return thereof to the Philippine Islands unsold. * * *

"Merchant,' as here used, means a person engaged in the sale, barter, or

exchange of personal property of whatever character. Except as specially
provided, the term includes manufacturers who sell articles of their own
production and commission merchants having establishments of their own for
the keeping and disposal of goods of which sales or exchanges are effected, but
does not include merchandise brokers.

'Sec. 1460. Sales not subject to merchants' tax.-In computing the tax above
imposed transactions in the following commodities shall be excluded:

'(a) Things subject to a specific tax,

'(b) Agricultural products when sold by the producer or owner of the land
where grown, or by any other person other than the merchant or commission
merchant, whether in their original state or not.'

The trial court denied relief. Its judgment was affirmed by the Supreme Court
of the Islands under the following circumstances. The case was argued three
times and was before the court for three years. Throughout the period one
judge was disqualified and the remaining eight were equally divided. Under
section 138 of the Philippine Administrative Code of 1917 the concurrence of
five judges is necessary for the pronouncement of a judgment where there is no
vacancy in the court; and the amount in controversy exceeds 10,000 pesos.
Thus, in this case, the equal division of the appellate court did not operate as an
affirmance of the judgment below. Finally, one of the four, who had been
consistently of the opinion that the corporation was not subject to the tax,
changed his vote and voted with the four who thought the tax had been

collected legally. He wrote, at the time of doing so, an opinion in which he

stated that he still adhered to his original belief and that he changed his vote
solely in order to break the deadlock, and thereby enable the corporation to
apply to this Court for a review. A writ of certiorari was granted. 278 U. S.
590, 46 S. Ct. 28, 73 L. Ed. . As the amount in controversy exceeds $25,000,
there is jurisdiction under section 7 of the Act of February 13, 1925, 43 Stat.
936, 940, 28 USCA 349. We are of opinion that the judgment should be
affirmed.
9

The corporation manufactured and sold the sugar. Section 1459 declares that
'except as specifically provided, the term (mercnants) includes manufacturers
who sell articles of their own production.' The exceptions are provided in
section 1460, and the corporation is not relieved by either of them. The first is:
'(a) Things subject to a specific tax.' Sugar confessedly is not. The second
exception is: '(b) Agricultural products when sold by the producer or owner of
the land where grown, or by any other person other than a merchant or
commission merchant, whether in their original state or not.' Exception (b)
affords no immunity to the corporation. Sugar cane is an 'agricultural product'
and the grower would doubtless have immunity on the sale of his half of the
sugar made therefrom provided he sold it himself or through some one other
than a merchant (including the manufacturer) or a commission merchant. But
the corporation could, in no event, have immunity on the sale of its own half of
the sugar; because it is a merchant within the express terms of section 1459-and
its sugar is not within either exception made by section 1460. Such would seem
to be the natural reading of the statute. To overcome it several contentions are
made.

10

First. It is contended that the sugar although physically manufactured by the

corporation, was legally manufactured by the grower, the corporation being
merely a servant hired by the grower to perform the service; that therefore the
corporation is not included in the class taxed of 'manufacturers who sell articles
of their own production,' and that the fact that the compensation was paid in
sugar instead of in cash is immaterial. The corporation is in no sense a servant.
It is an independent concern-a contractor. But even if it could be deemed a
servant of the producer of the cane, this view would not aid the corporation. It
is taxed not on sugar owned by the grower, but on sugar which it acquired and
then sold on its own account. The nature of the transaction by which the
corporation acquired the sugar is not of legal significance. The tax is solely on
the sale. If the sugar be deemed to have been bought by the corporation and
then sold, it was a merchant in the common acceptation of the term. If it is
treated as a manufacturer of sugar for hire, it is liable under the express
provision of the statute which declares that, for the purpose of the tax, the

manufacturer shall be deemed a merchant.

11

Second. It is contended that the clause in section 1459 that 'except as specially
provided, the term (merchants) includes manufacturers who sell articles of their
own production' does not mean to include all manufacturers who do so, but only
those whose main business is selling what they buy. No basis is shown for
imposing such a limitation upon the plain words of the statute; nor is it shown
why this corporation is in respect to the sugar sold in any different position
from one who manufactures sugar from cane bought for cash. A concern which
sold only sugar which it had manufactured from cane which it bought for cash
would clearly be within the terms of the statute; and no reason is suggested
why a concern which manufactures only sugar which it received in exchange
for services-and thus acquired by barter-should not be. The corporation was as
much engaged in the business of selling sugar as it was in the business of
manufacturing it. If it had obtained the sugar by a purchase for cash, it would
confessedly have been liable to the tax. If getting the sugar in exchange for the
service performed in grinding the other half of the cane for the grower be
deemed a barter, the corporation would under the terms of the statute likewise
be liable.

12

Third. It is contended that even if the sales by the corporation would be taxable
under section 1459, if that section stood alone, they are specifically exempted
by section 1460, because sugar is an 'agricultural product' and was sold by 'the
producer' within clause (b), which excludes from the tax 'agricultural products
when sold by the producer or owner of the land where grown, or by any other
person other than a merchant or commission merchant, whether in their original
state or not.' Centrifugal sugar may well be considered an agricultural product,
but he who produces it is the agriculturist-the grower-not the manufacturer.
That the word 'producer' is used in section 1460 in this restrictive sense is made
clear by the alternative exemption granted to the 'owner of the land where
grown.' In Allen v. Smith, 173 U. S. 389, 399, 19 S. Ct. 446, 449 (43 L. Ed.
741), this court, while holding that under the particular statute before it there
was no legal distinction made between 'manufacturer' and 'producer,' observed
that the latter term 'is more commonly used to denote a person who raises
agricultural crops and puts them in a condition for the market.'

13

Fourth. It is contended that centrifugal sugar being an agricultural product, its

sale is exempted from the tax by section 1460 unless made by 'a merchant or
commission merchant,' and that section 1460, unlike section 1459, does not
provide that a manufacturer shall be deemed a merchant. There is nothing in
section 1459 to suggest that the definition of merchant there given is only to
obtain for that section. The two sections were parts of the same statute. They

are not to be treated as unrelated enactments. In the absence of express

restriction it may be assumed that a term is used throughout a statute in the
same sense in which it is first defined. It is urged that if the Legislature had
intended the word to have the same meaning in both sections, it would not have
added 'commission merchant' in section 1460 as it had defined merchant as
including commission merchant in section 1459. The fact that 'commission
merchant' is repeated in section 1460, does not show that the word 'merchant' is
used in the two sections with different meanings.
14

Fifth. Finally the corporation urges that if it be held liable under sections 1459
and 1460 for these taxes, which were assessed and paid in 1920, 1921 and
1922, sugar centrals will hereafter be subject to double taxes; since in March,
1923, Act 3082, section 1462-an entirely different section of the Code which
imposes a one per cent. tax on the gross receipts of public utilities, hotels,
restaurant keepers, dress-makers and others-was amended by inserting the
words 'sugar centrals.' This argument is not persuasive as to the construction to
be given to the act of 1917. The amendment was enacted six years later than
the act here in question and six months after this action was begun.

15

Affirmed.